Rice Subsidy Controversy Widens, Farmers Protest Against Non Payment

Farmers from five northern provinces will blockade the Asian Highway and heighten their protest to oust the caretaker government after the government failed to pay them as promised

BANGKOK – Farmers are up in arms against the government’s failure to pay for their rice while employees of a state bank dressed in black to protest against borrowing from bank reserves to pay farmers.

Puti Srisamutnark, president of the Thai Farmers Promotion Association, said today that he was compiling a list of petitioners to lodge a complaint with the Administrative Court against the government for repeatedly failing to pay for the rice they have sold under the rice subsidy scheme.

Rice farmers shout slogans during a protest outside the Government House

The caretaker Yingluck Shinawatra government has pledged to buy rice from farmers at Bt15,000 per tonne.

Mr Puti said farmers in many areas have prepared for the new planting season but they have yet to receive payment for delivery of rice in the last harvest.

“They have admitted that they would earn only Bt6,000-8,000 per tonne from the next harvest while production cost would be as high as Bt6,000,” he said.

No matter which political party will run the country, the association will ask the new government to continue assisting farmers so that they sell rice at no less than Bt12,000 per tonne, he said.

Meanwhile, the labour union of the Bank of Agriculture and Agricultural Cooperatives (BAAC) held a special meeting today and strongly objected to the government’s plan to spend the depositors’ money to pay farmers.

BAAC employees dressed in black to display their opposition and said the government has already withdrawn Bt90 billion from the bank to subsidise the rice pledging scheme.

Union leader Prasit Pahome said the labour union protested the new move to borrow Bt55 billion from the BAAC to purchase rice from farmers in the 2014 crop.

“The Cabinet did not approve the Bt55 billion (before dissolving the House of Representatives). It is turning to the Government Savings Bank for the loan,” he said.

The caretaker government is not authorised by law on new financial expenditure.

Caretaker deputy finance minister Thanusak Lek-uthai is scheduled to meet with the BAAC board of directors today to discuss the bank’s financial allocation to the rice subsidy scheme.

Mr Prasit said BAAC employees nationwide will stand up for civil disobedience but will not stop servicing clients. They will organise a movement to remove the Board of Directors if it insists on lending to the government for the rice scheme.

“We have to protect the bank’s liquidity. The Public Health Ministry has threatened to withdraw its deposits if the BAAC approves loans for the rice subsidy program,” he said.

Deputy Commerce Minister Yanyong Puangrach

Meanwhile, The National Rice Policy Committee (NRPC) resolved today not to extend the February deadline to purchase rice in the 2013/2014 crop from farmers.

Caretaker Deputy Commerce Minister Yanyong Puangrach said some farmers have asked the government to continue buying rice from them under the pledging price of Bt15,000 per tonne after the end of the rice pledging programme late next month.

The government doesn’t want to be involved in additional financial obligations, he said, adding that the caretaker Cabinet will be asked to find financial resources to pay the remaining Bt700 million for rice in the 2012/2013 crop.

Mr Yanyong stood firm that the government has never intended to refuse payment but said that the reimbursement procedure for a caretaker government is complicated.

The government has so far paid Bt680 billion to farmers – a signal of its determination to pay and help farmers earn higher income from their rice sales, he said.

Mr Yanyong criticised the labour union of the Bank of Agriculture and Agricultural Cooperatives (BAAC) for obstructing loans, to be sought by the government for payment to farmers.

The BAAC has made profit from the rice pledging scheme including deposits from farmers and bonus to bank employees was from the profit the bank has made from the rice subsidy scheme, said Mr Yanyong.

He said the BAAC should help farmers who are encountering financial constraint and the BAAC has received full payment plus management and risk fees and interest from the loans given to the government.

There has never been risk involved for the BAAC and the labour union should let management manages the issue, he said, calling on the labour unions of the Government Savings Bank and Krung Thai Bank to take that into consideration if the government seeks help from the two state banks.

The government is not asking for free service and employees should bear in mind the state enterprises’ objectives of sustaining the economy in time of trouble, he said.

He said the Election Commission (EC) should also be aware that the rice pledging scheme is a continuous project, and not an election campaign.

Whether the government is capable of paying to farmers within the Jan 25 deadline depends on the EC’s decision, he said.

Caretaker Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong is scheduled to meet with EC members tomorrow to discuss the issue.

Vorapak Tanyawong, president of Krung Thai Bank, gave assurances that an extension of loans to the BAAC for the rice subsidy plan, if made, will be under similar regulations imposed for other financial institutions.

“We have to take into consideration the risk factor, the applicant’s payment capability and guarantors. The loan request must be scrutinised by a committee,” he said.

“Krung Thai Bank is a public company with 45 per cent of shares held by retail investors and financial institutes. It has to compete with major commercial banks and be accountable for stakeholders. It is under the supervision of the Bank of Thailand, Stock Exchange of Thailand and the Auditor General Office,” said Mr Vorapak.